Urban Redevelopment

Urban redevelopment is conceptually similar to land readjustment, with the exception that it happens in existing urban areas and often involves a rezoning by the government of a given area from a low-density (single-family housing) to higher-density (mixed-use or commercial) development. It is also accompanied by a provision of infrastructure improvements (mass transit, such as metro lines) that can support such up-zoning.

As part of this process, a government assembles the individual private properties and undertakes a new higher development plan and delivers the necessary infrastructure. At the end, the government returns to each landowner a share of the overall new development that is equivalent to their original land or property ownership. It retains a share of the development that it then sells to recover the cost of the infrastructure improvement.

Japan has a comprehensive scheme for implementing this tool under its Urban Redevelopment Law. This scheme allows landowners, tenants, and developers to use the opportunity of new transit development in built-up areas to create development opportunities. The government helps with and benefits from this process by changing zoning codes from residential to mixed-use, while also allowing for up-zoning. For details of this scheme, see box below.

A Hypothetical scenario using the urban development scheme in Japan